Question

1. What are Red Bull's greatest strengths and risks as more companies (like Coca-Cola, Pepsi, and Monster) enter the energy drink category and gain market share? 2. Should Red Bull do more traditional advertising? Why or why not? Discuss the effectiveness of Red Bull's sponsorships, for example, Bull Stratos. Is this a good use of Red Bull' marketing budget? Where should the company draw the line?

Answer 1

Answer:

Strengths

1. RedBull is a well-established brand in the Energy Drink sub-sector.
2. It has been in existence since 1987 making it a 33-year-old company. That's a lot of experience doing the same thing.
3. Given its years of experience, consumers have a lot of confidence in its brand. This means it has strong brand equity.
4. As of 2019, RedBull still has the highest market share of any energy drink in the world with a record 7.5 billion cans sold

Risks

1. The challenge is this, Coca-cola is a much older company with about 128 years behind it. It was established in 1892.
2. Coca-cola equally has a very strong brand equity
3. In the carbonated drinks sub-sector, it has dominated the sector since 2004. It's market share is estimated at 42.5%.
4. It has about 500 brands compared to Redbull which has only one brand.
5. In Pepsi was created in 1893. Just one year younger than Coca-cola. It currently has about 24.9% of the soda market. Within the cola segment alone, it has about 100 flavours.
6. Monster energy as a strong entrant into the energy drink market is only 18 years old and it already has 49 different drinks with about 14% market share worldwide.

Suffice it to say that if Red Bull does not concieve of a critical strategy to maintain market dominance, it may continue to bleed it's market share.

2. Red Bull should do more than traditional advertising.

There is no reason why it can go into the Soda space. There are countries where the big players still exert a huge dominance. Mexico, for instance, consumes the more coca-cola than anywhere else in the world.

Red Bull in addition to keeping it's market share through aggressive advertising, can enter into the soda market, targeting these regions where coca-cola and other players seem to have a pseudo monopoly.

Red Bull can also look at creating more flavours depending on the psychographics of the target market it is looking at.

Bull Stratos

Red Bull Stratos is the official name for the project involving Mr Baumgartner's mission. Mr Baumgartner's project involved a record breaking jump for the ages from the edge of space which cost about USD 30 million. It is on record that this is nothing like what Red Bull have ever done before and it did so at a fraction of it's annual sports marketing which is estimated at about USD 300 Million.

To answer the question about its effectiveness, its definitely yes.

Over 8 million people saw the jump which had the Red Bull logo/ branding conspicuously displayed. It was dubbed "the most successful Public Relations campaign of year 2012."

The line will always be dictated by the metrics which show returns on marketing budget invested.

Any strategy that currently works to enhance the brand of Red Bull or at least keep its dominance over the energy drink market, must be explored.

Cheers!